Tax devolution move is hard to figure as PM eyes options

All eyes were on the doors of the Treasury. The speculation in our small huddle waiting for the ministers was that, if they came out together, it had gone well; if they all sloped out separately, the meeting had been a disaster.

All eyes were on the doors of the Treasury. The speculation in our small huddle waiting for the ministers was that, if they came out together, it had gone well; if they all sloped out separately, the meeting had been a disaster.

They must have figured this out, because the corporation tax working group presented a united front, assembling together outside with carefully worded conclusions that gave little away about the painstaking negotiations that had come before.

But it wasn’t the quick-fix supporters of corporation tax devolution had been hoping for. The matter, we were told, now rests with David Cameron, who will be presented with a paper setting out the pros, the cons, and the bits that nobody can agree on.

Those who were in the meeting said it had been clear that corporation tax was not the dead duck some fear it has become.

If the Government had wanted to kill this off, they would have done so by now, one said.

But those sticking points just won’t go away, in particular what has become known as the ‘secondary elements’ question.

Finance Minister Sammy Wilson is pushing to soften the hit on Northern Ireland’s block grant by hanging onto the proceeds of other taxes, like income tax and national insurance should they increase in future years.

But the Treasury isn’t having this and wants an ‘escalator' mechanism, which would mean Northern Ireland would pay more depending on how lucrative the move turned out to be.

So what are Mr Cameron’s options? It seems unlikely he would overrule the Treasury. And the failure of the working group to agree the figures gives him cover for not settling the issue outright.

The fear of handing ammunition to Alex Salmond’s independence crusade could well mean we are presented with a fudge.

Perhaps more work is needed to get to the bottom of the costs. This could take us beyond 2014 and the independence referendum.

Or might an alternative gesture be made, perhaps within the framework of the coalition’s pledge to cut the UK rate of corporation tax to 22% by 2014?

We don’t yet have a date for the announcement. But George Osborne’s autumn statement on December 5 seems like a sensible option.

The working group has been keen to trumpet its achievements in showing the cut can be done. Whether it will be done, and when and how, are another matter.